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Whether or not we make it [DOW 11,000 that is] – in layman’s language - will ultimately come down to whether or not there are more ‘buyers’ than ‘sellers’ of equities between now and year’s end. From a technical perspective, however, Tim W. Wood speaks of Non-Confirmations. What Are They? Well, confirmations are described as follows: Indication that at least two indices, in the case of Dow Theory the industrials and the transportation, corroborate a market trend or a turning point. So, with the DOW presently poised right around 10,900; I first wonder [from a technical perspective] if there is anything “special” about 11,000? In a recent Reuters article, According to Marc Pado, market strategist of Cantor Fitzgerald, “The 11,000 level is less significant in terms of charting the market…” But 11,000 seems like such a nice, big “Round Number,” doesn’t it? Well, according to Deron Wagner’s [of Morpheus Trading Group], Wagner Daily, Total volume in both exchanges surged higher last Friday, adding another "distribution day" for both the S&P and Nasdaq. Total volume in the NYSE was 28% higher, while volume in the Nasdaq increased substantially by 33% over the previous day's level. To be fair, part of the increase in volume was likely attributed to the quarterly "quadruple witching" of options expiration on Friday. Nevertheless, the losses on higher volume caused the broad market to register its fifth day of institutional selling within the past four weeks. A healthy market can typically absorb two or three "distribution days" within a four-week period, but a fifth day of distribution within that time period is definitely an important warning sign to the bulls. Remember that volume tells us what is really happening "under the hood" of the markets. Daily analysis of the relationship between price and volume is also important because volume typically leads price, thereby giving us an early advantage at spotting potential trend reversals in the broad market. Without even looking at any charts, the recent pattern of "distribution days" alone should give the bulls cause for a pause. Well, I don’t know about you folks, but the last time I ‘looked under a hood’ – it was that of my car and I found a leaky radiator hose! What About A Santa Clause Rally? If the technicians can’t promise us DOW 11,000 for Christmas, I got to thinking about the average “Joe” trader on the good ole NYSE – perhaps they would oblige? It was after combing through some back dated articles of RealMoney by TheStreet.com that I was ‘saddened to’ learn that, Traders: Don't Believe in Santa Claus. Now, I’m down right upset and I had better go finish my Christmas shopping! Today's Market Overseas equity markets began the week on a positive note with Japan’s Nikkei Index gaining 218 to close at 15,391. Meanwhile, North American equity markets didn’t fare as well with the DOW giving up 39.06 to 10,836.53, the NASDAQ falling 29.74 to 2,222.74 and the S & P falling 7.42 to 1,259.90 NYMEX crude oil futures ended the day little changed at 58.05 per barrel. The interest rate complex was also little changed with the benchmark 10 yr. government bond ending the day with a yield of 4.44 % while the 5 yr bond finished the day at 4.36 %. In foreign exchange markets, the U.S. Dollar Index closed up .17 at 89.57 with the YEN at 116.07, the EURO at .8327, the GBP at .5675, the CAD at 1.1688, the YUAN at 8.07 and the RUBLE at 28.66. Precious metals did fractionally better with COMEX gold futures adding .20 to 503.90 per ounce while COMEX silver futures added .04 to close at 8.57. The XAU gold bug index ended the day down 1.16 to 121.20 while the HUI lost .07 to 258.99. On tap for tomorrow, at 8:30 am. the BUREAU of Labor Statistics [BLS] is due to release Nov. PPI [Producer Price Index] data – headline number expected -.5% vs. prior +.7% with core expected +.2% vs. prior -.3%. Also at 8:30 am. the Census Bureau is due to release data on November Housing Starts – expected 2030k vs. prior 2014k and Building Permits – expected 2090k vs. prior 2103k. That’s it for today – wishing you all a very happy, prosperous, and safe holiday season! Rob Kirby |
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